A new report reveals the best regions to invest in for strong rental yields. Here, we look at the key takeaways and which properties will help boost your portfolios.
Whilst London continues to generate landlords one of the strongest performances in terms of average rental yields over the last 5 years, new research by Benham and Reeves estate agents shows one region has outperformed the capital.
It is worth noting, of course, that this is a London estate agent, and therefore the data may not be fully representative of rental yields across the UK as a whole.
The report's key findings reveal:
- The average buy to let landlord generated an average rental yield of 4.17% over the last 5 years
- London remains one of the strongest areas, with average yields of 4.42% over the last 5 years
- The Northeast outperformed the capital, with an average yield of 4.84% over the last 5 years
- The East Midlands ranked as the weakest region, with an average rental yield of just 3.83%
Regional performance
London’s stability in terms of rental yields shows just how far the region has bounced back following the pandemic's lull. However, with lower property prices and high demand, it’s perhaps unsurprising that the Northeast ranked the highest.
The Northwest is close behind London, with an average yield of 4.38%, the third-strongest performance across all regions.
Yorkshire and the Humber and the Southwest follow, with average yields of 4.29% and 4.03%, respectively.
The East Midlands showed the poorest performance, with an average rental yield of just 3.83% over the last 5 years.
Industry outlook
The Director of Benham and Reeves, Marc von Grundherr, commented:
“Landlords have been hit hard in recent years with respect to the profitability of their portfolios and we have yet more red tape on the way this year via the government’s misguided Renters’ Rights Bill.
"Despite this, many have continued to enjoy the returns that are still available through well-informed and strategic investment into rental bricks and mortar and it’s fair to say that London remains the most lucrative area of the market, with the exception of the North East.
He added, "We’ve seen a particularly strong performance across the North, with a lower cost of investment contributing to favourable yields. However, where London is concerned, the returns on offer are very much driven by a buoyant rental market, fuelled by an overwhelming level of tenant demand.
"The likelihood is that very little will change in 2025 and despite the government meddling under the guise of improved tenant welfare, we expect Buy-to-Let to remain one of the most consistent investments available to the amateur and professional investor alike.”
What property should you invest in next?
Diversifying your portfolio is a great way to boost your rental profits, as well as focusing your investments on the best location. There are many different buy to let property types, giving you new opportunities to explore no matter your experience.
Property types like Houses in Multiple Occupation (HMOs), Holiday Lets, Student Lets, and Multi-Unit Freehold Blocks (MUFBs) all generate higher rental yields than standard buy to lets, making them a great property investment decision.
What next?
To see which properties you can invest in and find the right finance for your mortgage needs, speak to our experienced, whole-of-market mortgage brokers by calling us on 0345 345 6788 or submit an enquiry here.
